The following data are accumulated by Geddes Company in evaluating the purchase of $101,200 of equipment, having a four-year useful ife: Net Income Net Cash Flow Year 1 $34,000 $57,000 Year 2 Year 3 21,000 44,000 10,000 33,000 Year 4 (1,000) 22,000 Brecen alu
The following data are accumulated by Geddes Company in evaluating the purchase of $101,200 of equipment, having a four-year useful ife: Net Income Net Cash Flow Year 1 $34,000 $57,000 Year 2 Year 3 21,000 44,000 10,000 33,000 Year 4 (1,000) 22,000 Brecen alu
The following data are accumulated by Geddes Company in evaluating the purchase of $101,200 of equipment, having a four-year useful ife: Net Income Net Cash Flow Year 1 $34,000 $57,000 Year 2 Year 3 21,000 44,000 10,000 33,000 Year 4 (1,000) 22,000 Brecen alu
Transcribed Image Text:The following data are accumulated by Geddes Company in evaluating the purchase of $101,200 of equipment, having a four-year useful
ife:
Net Income
Net Cash Flow
Year 1
$34,000
$57,000
Year 2
Year 3
21,000
44,000
10,000
33,000
Year 4
(1,000)
22,000
Brecen alu
Definition Definition Calculation used to evaluate the investment and financing decisions that involve cash flows occurring over multiple periods. NPV is calculated as the difference between the present value of cash inflow and cash outflow. NPV is used for capital budgeting and investment planning as well as to compare similar investment alternatives.
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